2006: Migrants’ Remittances: The Good And The Bad

Posted on Thu, Sep. 28, 2006email thisprint this

Migrants' remittances: the good and the bad
Andres Oppenheimer


When mayors of about a dozen Latin American and Caribbean cities met in Miami this week to exchange ideas about their common problems, they touched on an issue that is seldom talked about: the possible link between migration, family remittances and Latin America's rising crime rates.

An estimated 12 million Latin American migrants in the United States send more than $40 billion a year to their relatives in their native countries, according to Inter-American Development Bank (IDB) estimates. About $20 billion a year goes to Mexico, $10 billion to Central America and the Dominican Republic, and much of the rest to Colombia, Brazil, Peru and other South American countries.

Until now, the conventional wisdom has been that remittances almost have only positive consequences for Latin American countries. It's cash that — unlike foreign aid — can't be stolen easily by government bureaucrats, because it goes directly to the pockets of the poor.

In addition, remittances could have a huge multiplier effect. Under IDB plans, these money transfers will be used to turn millions of Latin American poor into creditworthy individuals.

The idea is to convince commercial banks that if a Latin American immigrant in the United States has been sending regular remittances to a relative in Latin America, that's often a more secure source of income than the recipient's job in his home country. Therefore, commercial banks could offer mortgages or microcredits to Latin American recipients of remittances, using their foreign income as collateral.

But at the meeting of mayors in Miami earlier this week, United Nations and Colombian national police consultant Hugo Acero Velasquez said that not everything about the remittances is positive: The massive migration of Latin American men is leaving behind fatherless children, who often grow up raised by grandparents who tend to be too permissive.

As a result, millions of children are growing up on the streets. In countries with high youth unemployment rates, they often end up doing criminal jobs for drug-trafficking or other organized-crime gangs, other experts said. According to the latest World Health Organization figures, Latin America is the most violent region in the world after Africa. It has an annual average of 19 violent killings per 100,000 inhabitants, more than twice the world average.

In addition, receiving a cash transfer or a box of sneakers from a distant father in the United States often discourages young people from looking for jobs.

''Getting $50 a month can turn you into a bum,'' says Ral Benitez, a Mexican visiting scholar at American University in Washington, D.C. “In El Salvador, Honduras and Guatemala, you often see a complete destruction of the family structure. Women or grandparents are in charge of raising the children, and there is a total absence of the father figure.''

There is another potentially negative side effect of remittances. Latin American governments may be relying too much on them as a secure source of income.

A Columbia University study last year showed that remittances from Turkish immigrants in Germany began to fall after reaching their peak in the late 1990s, as a result of families' reunification in Germany.

The study, led by Professor Rodolfo de la Garza, says that the same thing could happen with Mexico, since a growing number of migrants are women and children who are crossing the border to live with their fathers in the United States.

My conclusion: There is little doubt that family remittances can have a huge positive impact on the region, if they are turned into guarantees for bank loans to the poor. But it may be time to address their negative impact on fatherless children in the region.

Perhaps Univisin and Telemundo — the largest U.S. Spanish-language television networks — should spend more time covering the impact of absentee fathers on their families back home. Or they could broadcast public-service messages urging immigrant fathers to call their children regularly and be on top of their activities as much as they can.

Street crime in Latin American cities is reaching alarming proportions. And in some cases, the root of the problem may lie in absentee fathers who connect to their children only through wire transfers, or an occasional box of sneakers.